Dive Brief:

• U.S. electric transit bus and battery manufacturer Proterra said in its Q4 2021 financial report that a growing backlog of orders for transit buses is a result of "global dislocations in supply chain and logistics." Additional challenges related to the pandemic, including labor absenteeism, are restricting its bus manufacturing to one shift a day.
• Nevertheless, the company reported delivering 208 electric buses in 2021, a 22% increase over the previous year. Bus orders increased 45% year over year.
• On the company's earnings call Tuesday, Proterra Chief Financial Officer Karina Franco Padilla said "inflationary pressures" led it to raise prices for electric buses in December, affecting both new orders and existing contracts with inflation clauses.

Dive Insight:

As demand grows for electric buses, cities and transit agencies will face production delays and rising costs. "The manufacturing environment is very challenging right now," said Proterra's chief executive officer, Gareth Joyce, on the earnings call. Proterra Transit had a backlog of $450 million worth of orders at the end of last year.

Joyce does not expect any "material improvement" in supply chain issues or production rates for the rest of the year. 

The CEO said he sees rapid growth ahead in demand for electric buses due to increased funding for the Federal Transit Administration's (FTA) Low or No Emission Vehicle Grant Program. 

"Funding for zero-emission buses in the U.S. will increase more than fivefold, to approximately $800 million per year through 2026, supporting a step-change in growth in terms of bus demand," he said on the call, identifying vehicle electrification as "one of the select multi-decade opportunities before us today."

In addition to manufacturing electric transit buses, Proterra produces electric powertrains for heavy-duty vehicles and complete charging systems for heavy-duty electric vehicle fleets. The company is supplying fleet chargers to the Los Angeles Department of Transportation and to the Santa Clara Valley Transportation Authority to be used at their bus depots. 

However, a shortage of critical charging hardware limited the company's ability to complete such installations in the second half of 2021. Joyce also noted that "ports are still clogged up," resulting in long delays getting material from the point of manufacture to the assembly line. 

"As we go into 2022, demand is not the challenge for us," Joyce said on the earnings call. "We've just got to make sure we get stable material flow."

For all of 2021, Proterra recorded revenue of $243 million, up 23% from 2020, with a fourth-quarter loss of $2.8 million due to product mix, higher freight costs, material costs, and labor and overhead expenses growing faster than expected. The company has grown at a compound annual rate of 25% since 2018, and it expects to grow between 24% and 34% in 2022. Proterra's transit bus segment accounted for 80% of revenue in the fourth quarter.